Monthly Dairy Prices 3-15-10 |

Monthly Dairy Prices 3-15-10

Lee Mielke
Dairyline Communications

The February Federal order Class III milk price was announced by the Agriculture Department Friday morning at $14.28 per hundredweight (cwt.), down 22 cents from January, but $4.97 above February 2009, and $1.33 above the comparable California 4b price. Class III futures portend a couple more months of loss. The March and April contracts settled Friday at $12.89. May settled at $13.14, June $13.95, and July at $14.55, with a 2010 peak of $15.23 in September. The February Class IV price is $12.90, down 95 cents from January but $3.45 above a year ago.

The four-week NASS-surveyed cheese price averaged $1.5110 per pound, down 2.6 cents from January. Butter averaged $1.3609, virtually unchanged. Nonfat dry milk averaged $1.0812, down 11.2 cents, and dry whey averaged 39.25 cents, up fractionally.

California’s February 4b cheese milk price is $12.95 per cwt., up 23 cents from January, $2.84 above February 2009. The 4a butter-powder price is $12.84, down 91 cents from January but $3.44 above a year ago. Comparable Federal order prices will be announced by USDA Friday morning.

Cash cheese prices are not helping matters. Block fell 4-1/4 cents the first week of March, closing Friday at $1.2975 per pound, but that’s still 9-3/4 cents above that week a year ago. Barrel closed at $1.25, down 4 cents on the week, but 3 cents above a year ago. Eight cars of block traded hands on the week and 34 of barrel. The NASS-surveyed U.S. average block price fell 1.4 cents, to $1.4921. Barrel averaged $1.4661, down 3.4 cents.

Thankfully, the butter market remains strong, closing Friday at $1.45, up 4-1/2 cents on the week and 28-1/4 cents above a year ago. Only one car was sold all week. NASS butter averaged $1.3592, up 1.9 cents.

Cash Grade A nonfat dry milk lost a penny on the week, closing Friday at $1.11. Extra Grade plunged 12 cents, dipping to $1.12. NASS powder averaged $1.0448, down 2.5 cents, and dry whey averaged 38.94 cents, down 0.5 cent.

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Market analyst Mary Ledman, Principal of Keough Ledman and Associates in Libertyville, Ill., warned in Tuesday’s DairyLine, that additional cheese capacity is coming on line from Southwest Cheese in March that could put continued downward pressure on prices but she pointed out that the last week of February saw 31 loads of block trade hands and 15 of barrel, indicating that people are finding value in this market.

In contrast butter is climbing. Ledman reported that Feb. 26, was the last trading day for old crop butter and that, as of March 1, only butter that had been produced after Dec. 1, 2009, could be traded at the CME.

It’s not unusual for a bump up on March 1, she said, as there’s only three months of production eligible to be traded and most people are cautious about trading butter early in March because they want to maintain inventories through the Easter/Passover holidays and then build inventory for the second half of the year.

Ledman also pointed to the bearish news in the January Cold Storage report. She was referring to the Jan. 31, American cheese inventory which was up 62 million pounds from a year ago. She called it “burdensome on the market” but added that the data represents product that is expected to be held in inventory for more than 30 days and, given the low cheese price for most of 2009, it was a good time to build inventory for aging programs.